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Real estate investment trust (REIT) Extra Space Storage said it would acquire Life Storage for $12.7 billion in an all-stock deal.
The combined company resulting from the deal will become the largest U.S. self-storage space operator by store count. The newly combined entity will have a value of about $36 billion on an equity basis. Earlier, Life Storage turned down an $11 billion all-stock takeover bid from Public Storage in February.
Life Storage operates over 1,150 storage facilities in 37 states and the District of Columbia. Extra Space Storage has over 2,000 locations in 41 states across the U.S. Extra Space will gain more than 50% more stores of its current number of facilities.
Extra Space CEO Joe Margolis was impressed by how Life Storage strategically repositioned itself over the last few years.
We are impressed with the management team’s strategic repositioning of the Life Storage portfolio over the last seven years, creating a highly diversified portfolio of quality storage assets in strong growth markets,” said Margolis.
Joseph Saffire, Chief Executive Officer of Life Storage, hoped that the combined entity would have accelerated growth while focusing on the needs of its customers.
“Together with Extra Space, we expect to accelerate growth while maintaining our customer-centric focus and commitment to continued innovation,” Saffire said.
After the deal, Extra Space and Life Storage shareholders are expected to own about 65% and 35% of the combined company, respectively. The board of Extra Space will expand to 12 directors from the current number of 10. The board will consist of three directors from Life Storage.
According to an announcement, the deal stipulates that Life Storage shareholders will receive 0.8950 of an Extra Space share for each Life Storage share, representing a total consideration of approximately $145.82 per share based on Extra Space’s share price close on March 31, 2023.
Citigroup Global Markets Inc. was the lead financial adviser for Extra Space, whereas Wells Fargo Securities and BofA Securities were Life Storage’s financial advisers.
After the deal’s announcement, Life Storage shares rose 3.5%, while Extra Space shares declined 5.1%.
The demand for self-storage places is reducing post-Covid, and experts believe more similar mergers can soon occur.
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